STNE - StoneCo: Misunderstood Pessimism Creates An Attractive Opening

2024-06-18 11:30:00 ET

Summary

• StoneCo Ltd. investors have endured a disappointing bear market decline.
• StoneCo's Q1 earnings miss has intensified execution risks for STNE to meet its full-year guidance.
• Potential political interference by the Lula administration has weakened investor confidence in the independence of Brazil's central bank.
• STNE is valued at a forward adjusted PEG ratio of 0.46, well below its sector median.
• I argue why STNE is well-primed for a recovery if investors can overcome their fears and capitalize on its weakness.

StoneCo Ltd. ( STNE ) investors have endured a hammering since my previous article in April 2024. In my bullish STNE article , I highlighted StoneCo's increased focus on the MSMB segment in lifting its value proposition. In addition, I also assessed that STNE's valuation seemed attractive, suggesting the market has yet to appreciate its go-to-market strategy fully....

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